Xi vows prosperity by reform for 2014

ECONOMIC FOCUS:The one-child policy, property rights of farmers and private investment were key tasks, the Chinese president said in his speech on Tuesday

Bloomberg

In his first New Year’s address as China’s leader on Tuesday, Chinese President Xi Jinping (習近平) said the country must press ahead with reforms this year to improve livelihoods and make the nation “rich and strong.”

China enters the new year facing slowing economic growth, rising environmental concerns and higher tensions with Japan over a territorial dispute that has damaged a US$366 billion trade relationship.

Tackling those challenges will be up to Xi, who as head of the Chinese Communist Party, military and state has amassed the greatest individual sway over his nation since former paramount leader Deng Xiaoping (鄧小平).

“In 2014, we will make new strides along the path of reform,” Xi said in a speech broadcast on state radio on Tuesday. “I firmly believe that new glories will be awaiting the Chinese people.”

In the address, Xi said a key task will be overseeing the broadest economic reforms since the 1990s, which were spelled out at the Communist Party Central Committee’s Third Plenum in November. Shifts include loosening the one-child policy, increasing property rights for farmers and encouraging private investment in more industries.

China’s equities slumped last year amid concern economic growth will slow without structural reforms such as revamping the nation’s state-owned enterprises.

The Shanghai Composite Index fell 6.8 percent last year, capping a third year of declines out of four and the worst-performing market in Asia.

An official report yesterday showed a manufacturing index slipped to a four-month low last month, underscoring challenges for Xi he tries to sustain economic momentum while rolling out reforms.

The Purchasing Managers’ Index was at 51, the National Bureau of Statistics of China and the China Federation of Logistics and Purchasing said in Beijing. That was less than the median 51.2 estimate in a Bloomberg News survey of 29 economists and November’s 51.4. A number above 50 indicates expansion.

Beijing estimates that economic growth slowed to 7.6 percent last year, according to a report by the Chinese State Council to the legislature. Analysts surveyed by Bloomberg News last month said they see growth slowing to a 24-year low of 7.5 percent this year and 7.2 percent next year.

Xinhua news agency said on Monday that Xi will head a reform-leading group to guide changes agreed to at the Third Plenum.

“Xi’s appointment as the head of the leading group is very significant,” Dariusz Kowalczyk, senior economist and strategist at Credit Agricole CIB in Hong Kong, said in an e-mail. “It means that the reforms are a top priority for the current leadership and therefore markets should watch them very carefully as a key driver of China’s economic and social policies in coming years.”

People’s Bank of China Governor Zhou Xiaochuan (周小川) said the nation will maintain a “prudent” monetary policy and promote financial reforms this year, according to a New Year’s Eve statement posted on the central bank’s Web site. Policymakers will ensure financial stability, he added.

In a separate speech published by Xinhua on Tuesday, Xi said that China will also strive to improve its “soft power.”

China has proved that its “path, theory and system” of socialism with Chinese characteristics is a success, Xi was quoted by Xinhua as saying.

“Everyone can realize their own dream in fighting for the China Dream,” the president said.